Peter O’Dwyer Managing Director, Bryte Specialist Motor
The transport sector, an integral part of our economy – feeding into every business and industry, has been among those more affected by the pandemic.
With so much changing almost overnight, insurers had to respond swiftly and creatively to the implications of lockdown on all motor customers. Progressive insurers took the lead by deploying a range of tailored approaches (some non-existent pre-COVID) that considered the unique challenges and operational dynamics of each customer’s business – as well as the industries in which they operate.
SOME OF THE MORE NOTABLE ADAPTIONS IN COVER INCLUDED:
Parked In cover: This afforded the benefit of comprehensive cover to fleet owners with non-operational vehicles – but at a much more reduced rate. A particularly valuable option for fleet owners with bank-financed vehicles that must meet the requirement for comprehensive cover.
Blended cover: Where fleets were/continue to be partially operational, among the more popular solutions has been blended insurance. Translating to comprehensive cover for the portion of the fleet that is operational and reduced cover for vehicles that aren’t, this offering provides greater financial flexibility to fleet owners while supporting business sustainability.
Flat rates: Flat rates for fleet insurance aligned to the level of exposure
Dormant policies: While far from ideal, the temporary pausing of cover has also been among the alternatives offered to help reduce the pressure on business, especially in instances where vehicles are spending much less time on the roads.
Premium relief: During the height of the lockdown, the traditional route of discounted premiums helped accommodate customers in their most difficult times. While this continues in some shape and form, it was incredibly beneficial at a time when people and businesses were challenged with a reduced (or even non-existent) income streams.
BALANCING THE DYNAMICS AT PLAY
Even though restrictions have eased dramatically, several commercial transport businesses are operating at lower levels, under strained and unpredictable conditions.
For example, the passenger transport segment is one that remains under tremendous pressure with large percentages of fleets not having hit the road in a year. With the tourism sector among those who dealt the hardest blow, despite the relief measures afforded, some luxury coach liners have unfortunately had to throw in the towel.
For those commercial transport operators that have persevered, the reality is that insurance is among the first costs to be cut. These extenuating circumstances are also compelling businesses to find more ways to trim their cost base in order to reduce rates and continue making a small profit or attempting to break even. Such cost cutting is coming at the expense of maintenance of the trucks which places business stability in jeopardy.
Competitive risk management solutions and an inordinate level of leniency may appear to be the need of the hour, but any decision must be made responsibly so. Cover must factor in the nuances of each business, its unique exposures as well as constraints.
It should also be tailored to respond to the needs of both the immediate reality and the medium term. Premium may be a dominant consideration but seamless processes, speedy turn-around times, quality of service, trusted partnerships, etc. are also extremely important to minimise downtime and accelerate post incident recovery.
Additionally, while the volume of vehicles on our roads may have reduced over the past year, their exposure – while on the roads – is no different from before. Truck hijackings continued to increase by 34,2%1 during the third quarter of 2020. Accordingly, such dynamics also need to be factored into the risk management strategies of these businesses.
RELATIONSHIP BETWEEN MEASURED INNOVATION AND RESILIENCE
In the current context, it isn’t as much about reinvention as it is about incremental innovation. For mutual business success and economic resilience, the emphasis should be on re-evaluating and tailoring products, services as well as related risk management propositions.
It’s about the intelligent use of technology (such as Dreamtec, AI, Bots and Predictive Analytics), data and other trends-based insights to help businesses navigate risk while equipping businesses to continue realising opportunity despite resource/cost/demand constraints. It is also about rewarding responsible driver behaviors that improve the risk profile of businesses and enhance profitability.
The odds may be stacked higher, but the insurance industry continues to play an empowering role in helping catalyse the resilience of the transport sector.